Latest Stories

Latest Stories

Final Regs. Clarify “Counting Nights” Rule for Dependents

By Alistair M. Nevius, J.D.

Related

TOPICS

Uncategorized Article

Tax Section

When a
child of divorced or separated parents lives with both of them
during the year, the right to claim the dependency exemption may
be released by the “custodial parent” (Sec. 152(e)). The
custodial parent is defined as the parent with whom the child
resides for the longest period of time during the year (Sec.
152(c)(4)(B)). Proposed regulations defined “custodial parent”
as the parent with whom the child resides for the greater number
of nights during the year (REG-149856-03).

Practitioners
have asked the Service to clarify the term “night” when
determining the child’s residence. For example, is it determined
by the child’s location at midnight (or some other time), or by
where the child sleeps that night? And in which year is the
night that spans December 31 and January 1 counted?

The
Service has issued final regulations (T.D. 9408) saying that a
child is counted as residing with a parent for a night if the
child sleeps at that parent’s residence, regardless of whether
the parent is at the residence during that night. If the child
does not sleep at the parent’s residence but is with the parent
while sleeping (such as when the parent and child go on
vacation), then the child resides with the parent for that
night.

Nights that extend over two tax years are counted
with the tax year in which the night started.

The winners of The Tax Adviser’s 2016 Best Article Award are Edward Schnee, CPA, Ph.D., and W. Eugene Seago, J.D., Ph.D., for their article, “Taxation of Worthless and Abandoned Partnership Interests.”

Don’t get lost in the fog of legislative changes, developing tax issues, and newly evolving tax planning strategies. Tax Section membership will help you stay up to date and make your practice more efficient.